Use data, investor feedback and targeting to your advantage
So what can IR teams do to assess the success of their strategies? What key performance indicators can they use to determine what works and what doesn’t?
‘This is always the most challenging part of investor relations work,’ says Jeff Siemon of General Mills.
‘We try our best to use measurable data, including changes in our relative valuation, frequency and breadth of our interactions with current shareholders and targets, diversification of our shareholder base (number of new holders and percentage of shareholdings from international investors), breadth of outreach within our internal employee base and other tangible metrics.
‘One concrete example of this is that we start each year with the list of our top 100 actively managed shareholders, and we segment them into three tiers. For our top tier, we work to ensure our CEO interacts with them regularly. For our second tier, our ‘minimum’ interaction should include our CFO. For our third tier, IR-only interaction is sufficient.
‘We do the same thing for the annual list of our top 50 investor targets: institutions that have little or no holdings but for which we'd be a good fit based on their current portfolio.’
Sharing his perspective, Richard Williams of Unilever adds: ‘Feedback from investors is the best source of measurement, both informally and via perception studies. If the strategy has targeting within it, then we look at how well that has succeeded.’
Feedback from investors is the best source of measurement, both informally and via perception studies
Tackling potential challengesAs with formulating and executing any strategy, there will always be challenges to overcome when setting an IR plan. This is especially true when it comes to deciding on the plethora of events an IRO might not only plan to host, but also potentially attend.
‘One of our biggest challenges is one I know we share with many IR peers: having a relatively small team and determining how to allocate our scarce resources across a wealth of exciting opportunities where we could make a signifiant impact for General Mills,’ says Siemon.
Sometimes, with limited resources and a finite budget, thinking outside the box can reap rewards, he adds: ‘We recently piloted a ‘backpack assignment’ program internally where we had a high-potential finance employee join IR for a short window of time before she moved into a new role in the organization. We used that resource to jump in on our Q4 earnings process as well as advance a few other projects that we haven’t been able to move forward due to limited resources.
‘It was a win-win – we benefited from a high-impact employee who helped us get some quick wins on a few key projects, and she got valuable exposure to investor relations without needing to wait for one of our limited full-time roles to open up.’
Williams says his team’s IR strategy achievements have included investor perception shifts, successful targeting and changing some aspects of the makeup of the company’s register. But what about challenges the team has had to overcome? ‘Working out what not to do,’ he says. ‘Especially when it comes to conferences and events.’
We’ve worked to tackle market and investor biases that may exist because of incomplete knowledge
Adding her experiences, Jill Sawyer of Prologis remarks: ‘We’ve had to overcome challenges that include tailoring our messaging to each investor segment and emphasizing different elements to reach different target audiences.
‘We’ve also worked to tackle market and investor biases that may exist because of incomplete knowledge.’
